AT&T Killing Off Two-year Phone Contracts Jan 8

By Jeff Gamet

Dec 31st, 2015 9:40 AM EST

Just like the Emperor wiping away the last vestiges of the Republic, AT&T is doing away with its remaining two-year contract options for cell phones. The company has been making a push away from two-year contracts and subsidized device prices for smartphones, and come 2016 that'll apply to the rest of its phone lineup and text messaging devices, too.

AT&T dropping new two-year contracts for all phones in January

The big change is supposed to go into effect on January 8, according to internal documents obtained by Engadget. Along with the end of two-year lock-in contracts, customers won't have an option for subsidized phone prices and will instead have to pay full price up front, or spread out their device payments as installments.

AT&T's internal FAQ says existing customers with a current two-year contract won't be able to upgrade to a new two-year agreement after January 8, which means the next pretty much every customer wants a new mobile phone they'll be moving to the AT&T Next plan.

Killing off two-year plans may make phone purchases seem more expensive up front, but can actually reduce the overall price customers pay to get their new smartphone. Two-year plans took into account the price of the phone, which was typically paid off after about 16 or so months. Cell services providers didn't lower monthly bills after subscribers paid off their phones, which meant they were making monthly payments when they didn't need to.

Spreading out the full price of a new phone as installment payments works out better because subscribers are essentially getting an interest-free loan. Once they pay off the full phone's cost, their monthly bill goes down.

AT&T hasn't officially announced the contract policy change, but it's a safe bet we'll see that in the next few days. If, for some reason, you really want a two-year phone contract from AT&T, hop to it. You have only a few days before that option is gone forever.